Question

Fashion Jewelers uses the perpetual inventory system. On April 2, Fashion sold goods with a cost of $5,500 for $14,000 with terms of 4/15, n/30. On April 4, the customer reported damaged goods and Fashion granted a $2,000 sales allowance. On April 10, Fashion received the payment for the sale. Give the journal entry that will be recorded on April 10 by Fashion.

Answer 1

Answer:

Explanation:

The journal entry is shown below:

Cash A/c Dr                 $11,520

Sales discount A/c Dr $480

   To Account Receivable                $12,000

(Being the cash received is recorded with discount)

Since in the cost of goods sold is $14,000 in which the $2,000 reflect returned goods, so the remaining balance is $12,000

And, the payment is made within 30 days, so the customer can avail 4% of the goods received

So, the discount would be = $12,000 × 4% = $480